The Bitcoin market has been riddled with several whale sales since June. The majority of these sales have been by miners and a few other whales, although recent news has emerged that German Government also sells its assets.
Due to the enormous scale of the transactions, government sales can be classified as whale movements. Many market participants can also claim that they have contributed to a increased sales pressure and a drop in the price of Bitcoin.
However, Ki Young Ju, founder and CEO of CryptoQuant, does not share this opinion. According to him, the reactions to government-linked wallet sales are mostly overestimated. Interestingly, his view is based on the cumulative value of Bitcoin inflows over the past year.
Government Bitcoin Sales Overestimated
Over the past two weeks, addresses linked to the U.S. and German governments have collectively sent over $737 million worth of bitcoin to cryptocurrency exchanges Coinbase, Bitstamp, and Kraken. These transfers, by their nature, can only be massive selloffs on the exchanges.
It is particularly notable that these transfers took place amid a month-long decline in the price of Bitcoin, which further contributed to the selling pressure.
However, while headlines about governments dumping Bitcoin may spark fear, uncertainty, and doubt (FUD) within the crypto community, the problem is not that big. While it is true that governments have liquidated some of their Bitcoin investments, the selloff has not been that huge in the grand scheme of things.
According to CryptoQuant data shared by Ki Young Ju, Bitcoin has received over $224 billion in inflows since 2023, with only 4% of that being related to assets seized by governments. Furthermore, the data shows that BTC seized by governments has contributed around $9 billion to the market capitalization achieved since 2023.
Government #Bitcoin the sale is overestimated.
$224 billion has flowed into this market since 2023. BTC seized by the government contributes about $9 billion to the realized cap.
This represents only 4% of the total cumulative value realized since 2023. Don’t let the government selling FUD ruin your trades. pic.twitter.com/12fy2sKsXH
— Ki Young Ju (@ki_young_ju) July 5, 2024
Based on this realized market cap data, it is clear that government-held Bitcoins do not really have much power and are tiny compared to the funds available in the market. Realized market cap is a unique way to look at the true valuation of Bitcoin. It takes into account the last price at which each BTC moved from its current position. This gives a more accurate picture of how much fiat currency has actually flowed into BTC.
Current State of Bitcoin
At the time of writing, Bitcoin is trading at $57,360 and is starting to recover some of its seven-day losses. Recent corrections have seen the crypto fall of the greatest magnitude since the bull cycle started at the 2022 low. Crypto is not out of the woods Bulls must continue to push the price into the $60,000 territory before Bitcoin can resume its upward trend.
Featured image from Getty Images, chart from TradingView
